NFLX Shares Up 3.70% after Netflix Raised Subscription Prices

Netflix announced on Thursday that its customers who have subscribed to standard and premium plans will be parting away with $13.99 and $17.99 respectively.

Shares of American streaming media company Netflix Inc (NASDAQ: NFLX) advanced 3.70% on Thursday to close the day trading at $504.21. The spike on Thursday was attributed to news that the company will increase current subscription prices in two months.

However, during Friday’s premarket they were down approximately 2% in regards to yesterday’s close.

Netflix announced on Thursday that its customers who have subscribed to standard and premium plans will be parting away with $13.99 and $17.99 respectively. As for the entry-level basic plan, the company did not alter it and therefore will remain at $8.99 per month.

Previously, Netflix was charging $12.99 and $15.99 for standard and premium subscriptions respectively.

Netflix Shares and Coronavirus Fundamentals

Being a major entertainment company especially during the pandemic when people are staying indoors to avoid spreading and contracting coronavirus, its shares have largely benefited.

According to the market performance provided by MarketWatch, Netflix shares have rallied 55.83% year to date through Thursday. In addition, they have added 3.4%, 0.23%, and 3.26% in the past three months, one month and five days respectively. The company has a market capitalization of around $214.82 billion with 441.8 million outstanding.

Notably, in the past 52 weeks approximately one year, Netflix shares have ranged between $281.14 and $575.37. Netflix shares on the weekly chart have formed a triple top at the all-time high, which may indicate a possible further decline. However, the scenario may be rejected if the buyers accumulate more than sellers, which will lead to a breakout to a new record level Netflix shares received an average of Over rating from 41 Wall Street analysts according to MarketWatch.

Analysts and shareholders are optimistic the company will deliver despite the increased competition from other streaming companies.

With any effective coronavirus vaccine months away from FDA approval to the mass public amid fears of an emerging wave of infection, people are expected to return back to staying at home. Hereby giving Netflix a chance to earn more from increased subscription prices.

During the latest Netflix earnings call, chief operating officer Greg Peters gave an indication of why the company is expected to raise subscription prices.

According to Peters, as the company continues to invest in more original content that the customers enjoy, users will feel the value of their money. “There is that opportunity to occasionally go back and then ask for members, where we’ve delivered that extra value in those countries, to pay a little bit more,” he explained.

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